Islamic Banks Merger Announcement

Trading for the shares of five Islamic banks that are set to merge has been halted as of today, November 6, pending further notice. This information was disclosed separately by the banks through the Dhaka Stock Exchange.

The banks involved in this merger include First Security Islamic Bank, Union Bank, Global Islamic Bank, Social Islamic Bank, and Export-Import Bank.

On November 5, Bangladesh Bank formally communicated to the boards of these banks, indicating that they were not viable under the Banking Companies Act.

Depositors need not worry; their money is safe.

Ahsan H Mansur, Governor, Bangladesh Bank

Furthermore, the Bangladesh Securities and Exchange Commission (BSEC) issued a notification concerning the situation, stating that according to Section 15 of the Bank Resolution Ordinance of 2025, the five banks are now considered invalid—this decision took effect from November 5.

As a result, steps have been taken to stop trading in these banks starting today.

The complete merger process is expected to span around two years, but the central bank assures that small depositors—those with balances up to Tk 200,000—will have access to their money within a month.

For larger depositors, fund disbursement will happen in phases.

This decision aligns with the central bank’s strategy to stabilize the financial sector following the dissolution of the banks’ boards and the appointment of new administrators.

The central bank officially declared these institutions unsustainable, leading to the appointment of five managing directors as administrators for each bank.

BB Governor Ahsan H. Mansur noted that these administrators will evaluate the banks’ assets and liabilities before proceeding with the merger.

Despite the upheaval, the central bank reassured the public that it is safe to keep their deposits and advised against panic withdrawals.

“The reorganized bank will be more robust than any other. Depositors should feel secure,” Mansur stated.

He added that depositors would receive a market-compliant return rate once the new bank starts functioning, which aligns with standard market conditions.

With around 75 million deposit accounts involved, all will remain intact post-merger. At this moment, there are no plans for staff reductions, although restructuring may occur later if deemed necessary.

However, this news may not sit well with equity investors. Mansur confirmed that, due to the Bank Insolvency Ordinance, shares owned by sponsor directors and individual shareholders would effectively hold no value.

For bondholders, who have collectively invested over Tk 4 billion, there is an expectation that they will recover their investments over time, with additional guidance being issued by the Bangladesh Bank shortly.

This merger is projected to yield the country’s largest Islamic bank, boasting approximately Tk 2.2 billion in assets and a planned paid-up capital of Tk 35,000 billion—the highest ever in Bangladeshi banking history.